BoP surplus in Q3: IMD bonds come in handy

By Our Special Correspondent

CHENNAI, APRIL 1. The balance of payments position improved dramatically to $4.169 billion in the third quarter of the current fiscal, thanks to the inflow of India millennium bonds in October. The balance was a negative in the previous two quarters at $413 million (Q2) and $1.021 billion in Q1.

The surplus in the third quarter has been facilitated by inflow of external loans at $4.957 billion (net). These were only $276 million in Q2 and a negative $366 million in the first quarter. It may be mentioned that the IMD bonds mopped up $5.5 billion. The overall BoP surplus stood at only $2.102 billion in October- December 1999.

Foreign investments were actually lower at $134 million in October-December against $568 million and $1.197 billion in the previous two quarters. There was a setback in portfolio investments.

These declined sharply by $389 million in Q3 against net additions of $80 million and $603 million in the two previous quarters. NRI deposits too declined by $381 million in Q3 from $610 million and $752 million in July-September and April-June. On the current account side, the adverse balance was less at $469 million in the third quarter against $1.434 billion in the second quarter, an improvement of nearly $1 billion.

This has been made possible with a reduction in the adverse trade balance to $3.959 billion in Q3 from $4.491 billion in the second quarter.

This scenario should be viewed in the face of skyrocketing oil prices which completely tilted the foreign trade scenario. The export effort was phenomenal with a 18 per cent growth in the 11 months, April-February 2000-01. Private transfers were steady at $3.119 billion in the latest quarter.

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